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If you believe in the concept of to-big-to-fail banks those take the whole economy with them if they fail. That means that the government has to bail them out if they might fail. It also means that if they do criminal actions like laundering billions of drug money the government can't effectively punish the organisation because it's also to-big-to-persecute.

That means that those organisations are incentived to take risks that earn huge returns at the cost of getting bailed out. It means that the companies also are going to make money with criminal activity as the government doesn't punish them enough to detere that.

In the saving&loans crisis hundreds of bankers did go to prison for misdeeds they committed. This last crisis played out differently, largely because the big banks have enough power to prevent the government going after them.

It's already too late to avoid the to-big-to-fail trap. The world banking system is already in a very fragile state. My gosh, the Bunds, the safest of the safe, is in major trouble. Because splitting up a bank requires a serious accounting and re-negotiation of counter-party risk, we'd have to bail them out before we could split them up.

A move by the US government to do a bail-in rather than a bail-out would probably bring down the world finances markets, locking up international trade until business could re-adjust. This would probably be good for the world economy in the long term, but it would be very uncomfortable in the short term and thousands of people would die as a result o starvation and other effects of economic dislocation.
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